Orange revolution gives a second chance for Indian steelmakers

President Yuschenko orders a review of Ukraine’s crony privatisation

Ukraine’s orange revolution, that threw the old pro-Russia oligarchy out of power and propelled the pro-West Viktor Yuschenko into power, has been criticised by some Indian commentators as an thinly vieled attempt by the West to make further inroads into the Russian sphere of influence. They may be right. But Yuschenko’s repudiation of the previous regime’s dodgy privatisation deals has thrown up one opportunity that can possibly benefit Indian steelmakers.

Tata Steel and Mittal Steel were denied a chance to acquire Krivorozhstal, a Ukrainian state-owned steel company, when the regime of erstwhile President Leonid Kuchma so tweaked the privatisation rules that it fell into the hands of a company controlled by, unsurprisingly, his own son-in-law. Yuschenko’s move to revisit the privatisation deal allows Tata Steel and Mittal Steel another chance to acquire the company, albeit at a higher price. Tata Steel, India’s largest steelmaker, and Mittal Steel (which is already the world’s largest steelmaker due to its global acquisition strategy) will be competing against Europe’s Arcelor, US Steel and Russia’s Severstal.

How Ukraine handles the privatisation of its steelmaker will be a litmus test of its orange revolution. If the Yuschenko government, subtly or otherwise, tilts the ground in favour of the Western companies it will only prove to be a new version of the old. It would do well to avoid making the same mistake that discredited its predecessor.